Quick poll being taken right now on NPR's website. Its a political tournament in the spirit of March Madness. Round 2 is currently Ron Paul vs Mitt Romney as well as other GOP match ups including Sanford, Huckabee, Palin etc...

Speaking of March Madness... I miss my college hoops! Its a little late, but I just learned about a site called justin.tv, its the source for online live video. I should be able to catch my nba on there live for the rest of the season!

Tuesday, March 24, 2009

I wanted to report one of the funnier items I've stumbled across while peaking in the little store fronts that are scattered throughout the city. A pleasant little store that specializes in western-style home decorating had this wonderful little jar behind the counter which reads, "What the IRS missed."

I thought finding this jar in China was just too good. So, after looking around the shop and realizing the sole copy of this jar was the one resting behind the sales counter, I asked the gentleman what it would cost for the jar. Its a great example of how generous and kind most of the locals are here. He could tell I was quite humored by the message, told me it was his only one and that he had kept it behind because it was cracked. I examined the jar, saw that the damage he was referring to was barely noticeable, and told him I was fine with that. In a great twist of irony (given the nature of the potential purchase) the gentleman told me I could have it free of charge. He was just happy to make my day! I quipped something about him not needing to worry about any sales tax and was on my merry way.

In the spirit of this new bedside decoration, I leave you with an interesting read regarding our current economic situation.

"What the IRS Missed" (Made in China) US Constitution (Printed in America)

The Mother of all Bells

Peter Schiff Mar 20, 2009

is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell's reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine.

While nearly every facet of America's economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.

This week the Federal Reserve finally made clear what should have been obvious for some time - the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.

In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed's printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.

Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market's attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.

Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.

Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt then it expects as it becomes the only buyer in a seller's market.

Just last week, Chinese premier Wen Jiabao voiced concern about his country's massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.

There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan which it then uses to buy treasurers. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.

With such a policy in place, America has now become a banana republic. It won't be too long before our living standards reflect our new status.

Got Gold?

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For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my latest book"The Little Book of Bull Moves in Bear Markets." Click here to buy it now.

For a look back at how I predicted the current crisis, read my 2007 bestseller "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to buy a copy today.

More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter.

Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation's leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and has appeared on CNBC, CNNfn., and Bloomberg. In addition, his views are frequently quoted locally in the Orange County Register.

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkley in 1987. A financial professional for seventeen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services.

Friday, March 20, 2009

Hello again,Here are a few shots of me teaching etc...On Tuesday evenings I have four 9 year olds who come to my house for private lessons. Its a one hour session, usually a mother or two will come with and sip tea on the balcony or something while I teach. Its a good time all around!

I've also posted some shots of my new phone. Its a local knockoff of the Motorola A1800...touch screen, duel sim cards, mp3, bluetooth etc...all the toys! The software on the phone is even an exact replica. The legitimate Moto retails for roughly 700 USD Stateside. I picked mine up as a gift to myself after payday, it cost farrrrr less, not over 70 USD. Pretty nice eh?

From what I can gather, it is fair to venture that China's successes are now revealing more of the United States' weaknesses. Last week, China announced their government would be injectiong another $585 billion US Dollars into their economy. But top officials stated otherwise today claiming, "extra measures might prove unnecessary because substantial fiscal and monetary stimulus is already coursing through the economy."

In other words, China's economy is showing signs of a real recovery. There are many reasons for this, so it really shouldn't come as a surprise. The Chinese economy is based on real value, as in, actual, real world production. This is quite the opposite of most of the US economy which has been built on the false premise of decades of cheap credit and minimal actual production.

When our politicians say that the government bailouts are necessary in order to lend for future jobs, they are suggesting that jobs alone will create real value in the economy. This couldn't be further from the truth. A job for the sake of a job simply doesn't provide any true economic value, especially if the tab is simply being paid by freely printed money and poor lending standards. At best, these government stimulant plans are mere attempts to postpone more necessary economic pain (at worst, and more likely, these massive expenditures will provide minimal aid while drastically lengthening and deepening are current situation).

Another example of just how paper thin our economy is can be seen in the Secretary of State Clinton's recent journey to China. Traditionally, a new Secretary of State's first journey overseas is always to Europe. Its quite telling that Mrs. Clinton's first trip is through East Asia. While in Beijing, Mrs. Clinton angered many of her most faithful supporters when she suggested that human rights issues with China are no longer a priority. In reality, she was stating a fact. The US is in no position to belittle China, lest we forget that China has near single handedly paid for our government's adventures in Iraq and Afghanistan. How? Well, they bought all of the Treasury Bonds that our government was desperate to sell to raise the capital.

So if Clinton wasn't in Beijing to criticize China's domestic policies, what was she there for? She was pleading for China to continue to buy more T-Bills in the coming years. If this was her central purpose, then we can consider her mission a failure. China suggested that they have no interest in buying more of our nation's debt. This makes sense, since the likelihood of us repaying the trillions we already have sold them is hard to imagine.

In closing, here is a very telling excerpt from the aforementioned article:

"But I believe that, with the measures that we've taken or will take, we can have full confidence that we can escape the current hardships and fully respond to this crisis, because in the long term our economic conditions have not fundamentally changed," Zhang added.

The officials made it clear that China still had plenty of ammunition to fire if necessary.

China's national budget deficit will jump more than sevenfold this year to over 1 trillion yuan. But that will still be less than 3 percent of national income. The United States, by comparison, is budgeting for a deficit of 12.3 percent of GDP."

Please keep in mind, something to the tune of 70% of our nation's GDP is nothing more than consumer spending. That's right, our GDP is overwhelmingly based on consumerism, not valuable production. Now that the carpet has been pulled from under the consumer...what's left of our GDP...and how is our bankrupt government managing to bailout all of these bankrupt institutions?

Jesse-

PS: For a great, 10 minute video that really sums it all up and provides a direction for hope, check out this YouYube clip titled: Ron Paul and Peter Schiff Were Right.

Wednesday, March 4, 2009

Sorry I haven't updated here much lately. The month has been a busy one, for me and my personal laptop. Shortly after my last update on here, my computer took a dump. After 10 or so days of dealing with that, I got it back up and running. While that was going on, I have also become very busy with my new job. I've started working for EF (English First) which is the world's largest international English training school. They have schools in over 150 countries currently. I'm teaching classes with children as young as six all the way up to adult night courses and day trips to companies.

Two days ago, I landed my first company teaching gig. A driver takes me about 40 minutes out of Xiamen to Black and Deckers headquarters. I'm teaching 15 or so of their executives and managers. Most of them have traveled to the US on business at some point in their time with the company, so it was a lot of fun chatting with them and getting to hear some of their experiences.

The school has been eating up most of my time, but its starting to get a little easier as I adjust along with the learning curve. Hopefully this translates into more time for other priorities such as this maintaining this blog. Through February, I actually accumulated a bunch of photos and videos that I want to share with you, but I just need some time to sit down and do some editing and writing.

This first picture was taken on Valentine's Day. Yes guys, its also celebrated here in China! Hallmark has done their job well! But seriously, it was actually a very lovely day spent with my girlfriend Lupita. Since I had little time to prepare after getting off work at 6, I opted to play it safe and cook up some authentic spaghetti that I had found a few days before at Xiamen's only western food market. A very nice evening!

This is my Scottish manager and friend, Simon, the other night when he came over and cooked up some really good dishes and helped me drink a few BaiJiu's, China's potent little rice wines.This shot is of a night market that pops up daily just ten minutes walk down the street from my apartment. It really is a trip walking through the market, everything you can imagine eating is there: fish, chickens, rabbit, squid, its all there. I've got some video clips that I'm going to be editing together from when I last walked through. Hopefully I can get those posted soon too!

Miss you all and hope all is well. Look for more updates soon as I start to settle back into a bit of a routine around here.

About Me

Jesse is a light-footed, freewheeling American who has recently taken up residence in China.
Starting January 15th, Jesse is returning to China to take up teaching English while furthering his own Mandarin studies.
This blog will serve as his main communication hub for sharing highlights with friends and family back home.
Enjoy!